This is the accessible text file for GAO report number GAO-07-344
entitled 'Poverty In America; Economic Research Shows Adverse Impacts
on Health Status and Other Social Conditions as well as the Economic
Growth Rate' which was released on January 24, 2007.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as part
of a longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
January 2007:
Poverty In America:
Economic Research Shows Adverse Impacts on Health Status and Other
Social Conditions as well as the Economic Growth Rate:
GAO-07-344:
GAO Highlights:
Highlights of GAO-07-344, a report to the Chairman, Committee on Ways
and Means, House of Representatives
Why GAO Did This Study:
In 2005, 37 million people, approximately 13 percent of the total
population, lived below the poverty line, as defined by the Census
Bureau. Poverty imposes costs on the nation in terms of both
programmatic outlays and productivity losses that can affect the
economy as a whole. To better understand the potential range of effects
of poverty, GAO was asked to examine (1) what the economic research
tells us about the relationship between poverty and adverse social
conditions, such as poor health outcomes, crime, and labor force
attachment, and (2) what links economic research has found between
poverty and economic growth. To answer these questions, GAO reviewed
the economic literature by academic experts, think tanks, and
government agencies, and reviewed additional literature by searching
various databases for peer- reviewed economic journals, specialty
journals, and books. We also provided our draft report for review by
experts on this topic.
What GAO Found:
Economic research suggests that individuals living in poverty face an
increased risk of adverse outcomes, such as poor health and criminal
activity, both of which may lead to reduced participation in the labor
market. While the mechanisms by which poverty affects health are
complex, some research suggests that adverse health outcomes can be
due, in part, to limited access to health care as well as greater
exposure to environmental hazards and engaging in risky behaviors. For
example, some research has shown that increased availability of health
insurance such as Medicaid for low-income mothers led to a decrease in
infant mortality. Additionally, exposure to higher levels of air
pollution from living in urban areas close to highways can lead to
acute health conditions. Data suggest that engaging in risky behaviors,
such as tobacco and alcohol use, a sedentary life-style, and a low
consumption of nutritional foods, can account for some health
disparities between lower and upper income groups. The economic
research we reviewed also points to links between poverty and crime.
For example, one study indicated that higher levels of unemployment are
associated with higher levels of property crime. The relationship
between poverty and adverse outcomes for individuals is complex, in
part because most variables, like health status, can be both a cause
and a result of poverty. These adverse outcomes affect individuals in
many ways, including limiting their development of the skills,
abilities, knowledge, and habits necessary to fully participate in the
labor force.
Research shows that poverty can negatively affect economic growth by
affecting the accumulation of human capital and rates of crime and
social unrest. Economic theory has long suggested that human
capital—that is, the education, work experience, training, and health
of the workforce—is considered one of the fundamental drivers of
economic growth. The conditions associated with poverty can work
against this human capital development by limiting individuals’ ability
to remain healthy and develop skills, in turn decreasing the potential
to contribute talents, ideas, and even labor to the economy. An
educated labor force, for example, is better at learning, creating and
implementing new technologies. Economic theory suggests that when
poverty affects a significant portion of the population, these effects
can extend to the society at large and produce slower rates of growth.
Although historically research has focused mainly on the extent to
which economic growth alleviates poverty, some recent empirical studies
have begun to demonstrate that higher rates of poverty are associated
with lower rates of growth in the economy as a whole. For example,
areas with higher poverty rates experience, on average, slower per
capita income growth rates than low-poverty areas.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-344].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Sigurd R. Nilsen at (202)
512-7215 or at nilsens@gao.gov.
[End of Section]
Contents:
Letter:
Results in Brief:
Background:
Economic Research Links Poverty with Adverse Outcomes for Individuals
Such as Poor Health and Crime:
Economic Research Suggests a Negative Association between Poverty and
Economic Growth:
Concluding Observations:
Reviewer Comments:
Appendix I: Bibliography:
Appendix II: Contacts and Acknowledgments:
Table:
Table 1: Selected Examples of Federal Cash and Noncash Assistance to
Low-Income Families and Individuals, Fiscal Year 2004:
Figures:
Figure 1: Selected Health Indicators by Poverty Status:
Figure 2: Percentage of Population with No Health Insurance (Private or
Medicaid) by Poverty Status:
Figure 3: No Visits to Any Health Provider in the Past 12 Months
(Children under 18 Years of Age) by Level of Insurance:
Figure 4: Percentage of Population Who Have a Sedentary Lifestyle, Are
Overweight, or Are Obese, by Poverty Status:
Abbreviations:
CCDBG: Child Care and Development Block Grant:
CRS: Congressional Research Service:
EITC: Earned Income Tax Credit:
GDP: gross domestic product:
HHS: Health and Human Services:
LIHEAP: Low-Income Home Energy Assistance Program:
NAS: National Academy of Sciences:
NBER: National Bureau of Economic Research:
SCHIP: State Children's Health Insurance Program:
SSBG: Social Services Block Grant:
TANF: Temporary Assistance for Needy Families:
WIC: Special Supplemental Nutrition Program for Women, Infants and
Children:
United States Government Accountability Office:
Washington, DC 20548:
January 24, 2007:
The Honorable Charles B. Rangel:
Chairman:
Committee on Ways and Means:
House of Representatives:
Dear Mr. Chairman:
According to the Census Bureau, approximately 37 million people in the
United States--nearly 13 percent of the total population--lived below
the poverty line in 2005.[Footnote 1] This percentage was significantly
larger for particular population groups, specifically children,
minorities, and those living in certain geographic areas such as inner
cities. The federal government spends billions of dollars on programs
to assist low-income individuals and families.[Footnote 2] These
programs included Medicaid, food stamps, Temporary Assistance for Needy
Families (TANF), and the Earned Income Tax Credit (EITC), to name some
of the largest. While some have taken issue with Census' official
poverty measure and proposed alternative measures, it is generally
recognized that poverty imposes costs on the nation as a whole, not
merely in terms of programmatic outlays but also through lost
productivity that can affect the overall economy.
A substantial body of economic research has looked at the effects of
poverty and you asked us to discuss (1) what the economic research
tells us about the relationship between poverty and adverse social
conditions, such as poor health outcomes, crime, and labor force
attachment; and (2) what links economic research has found between
poverty and economic growth.
To answer these questions, we reviewed the economic literature by
academic experts, think tanks, and government agencies, which we
collected from searches of various databases, peer-reviewed economic
journals, specialty journals, and books. We also provided our draft
report to four external reviewers. They are recognized experts who have
conducted research and published on the topic of poverty and economic
growth and whose work has recommended a variety of approaches and
strategies to policymakers. We limited the scope of our work by looking
at recent studies published since 1996, excluding anything older, with
exceptions made for work that was considered seminal. Thus, our results
are not an exhaustive or historical treatment of the topic. Our review
was primarily driven by the economic literature focused on the United
States either exclusively or including other developed nations; studies
from other disciplines were excluded unless they were captured in
either the economic study under review or its bibliography. When we
refer to poverty in the report, we are using an absolute measure, not a
relative one. This means that, for the most part, the studies we
reviewed typically used the official poverty line published by the
Census Bureau as its benchmark. A few of the studies we reviewed used
relative measures such as the poorest 10 percent of the population.
Our work was conducted between October 2006 and January 2007 according
to generally accepted government auditing standards. Because we did not
evaluate the policies, operations, or programs of any federal agency to
develop the information presented in this report, and because we are
not making any recommendations, we did not seek agency comments.
However, we met with agency officials from the Departments of Commerce,
Health and Human Services, Justice, and Labor to obtain information on
research they or others had conducted related to our work objectives.
Results in Brief:
Economic research suggests that individuals living in poverty face an
increased risk of adverse outcomes, such as poor health and criminal
activity, both of which may lead to reduced participation in the labor
market. While the mechanisms by which poverty affects health are
complex, some research suggests that adverse health outcomes are due,
in part, to limited access to health care as well as exposure to
environmental hazards and engaging in risky behaviors. For example,
some research has shown that increased availability of health insurance
such as Medicaid for low-income mothers led to a decrease in infant
mortality. Likewise, exposure to high levels of air pollution from
living in urban areas close to highways can lead to acute health
conditions. Data suggest that engaging in risky behaviors, such as
tobacco and alcohol use, a comparatively sedentary life-style, and a
low consumption of nutritional foods can account for some portion of
the health disparities between lower and upper income groups. The
economic research we reviewed also points to links between poverty and
crime. For example, one study indicated that higher levels of
unemployment are associated with higher levels of property crime. The
relationship between poverty and adverse outcomes for individuals is
complex, in part because most variables, like health status, can be
both a cause and a result of poverty. Regardless of whether poverty is
a cause or an effect, the conditions associated with poverty can limit
the ability of individuals to develop the skills, abilities, knowledge,
and habits necessary to fully participate in the labor force.
Research shows that poverty can negatively impact economic growth by
affecting the accumulation of human capital and rates of crime and
social unrest. Economic theory has long suggested that human capital--
that is, the education, work experience, training, and health of the
workforce--is considered one of the fundamental drivers of economic
growth. The conditions associated with poverty can work against this
human capital development by limiting individuals' ability to remain
healthy and develop skills, in turn decreasing the potential to
contribute talents, ideas, and even labor to the economy. An educated
labor force, for example, is better at learning, creating, and
implementing new technologies. Economic theory suggests that when
poverty affects a significant portion of the population, these effects
can extend to the society at large and produce slower rates of growth.
Although historically research has focused mainly on the extent to
which economic growth alleviates poverty, some recent empirical studies
have begun to demonstrate that higher rates of poverty are associated
with lower rates of growth in the economy as a whole. For example,
areas with higher poverty rates experience, on average, slower per
capita income growth rates than low-poverty areas.
Background:
Economic growth is one of the indicators by which the well-being of the
nation is typically measured, although recent discussions have focused
on a broader set of indicators, such as poverty. Poverty in the United
States is officially measured by the Census Bureau, which calculates
the number of persons or households living below an established level
of income deemed minimally adequate to support them. The federal
government has a long-standing history of assisting individuals and
families living in poverty by providing services and income transfers
through numerous and various types of programs.
Measuring the Nation's Well-Being: Economic Growth and Other
Indicators:
Economic growth is typically defined as the increase in the value of
goods and services produced by an economy; traditionally this growth
has been measured by the percentage rate of increase in a country's
gross domestic product, or GDP. The growth in GDP is a key measure by
which policy-makers estimate how well the economy is doing. However, it
provides little information about how well individuals and households
are faring.
Recently there has been a substantial amount of activity in the United
States and elsewhere to develop a comprehensive set of key indicators
for communities, states, and the nation that go beyond traditional
economic measures.[Footnote 3] Many believe that such a system would
better inform individuals, groups, and institutions on the nation as a
whole.[Footnote 4] Poverty is one of these key indicators. Poverty,
both narrowly and more broadly defined, is a characteristic of society
that is frequently monitored and defined and measured in a number of
ways.[Footnote 5]
How Is Poverty Defined in the United States.?
The Census Bureau is responsible for establishing a poverty threshold
amount each year; persons or families having income below this amount
are, for statistical purposes, considered to be living in
poverty.[Footnote 6] The threshold reflects estimates of the amount of
money individuals and families of various sizes need to purchase goods
and services deemed minimally adequate based on 1960s living standards,
and is adjusted each year using the consumer price index. The poverty
rate is the percentage of individuals in total or as part of various
subgroups in the United States who are living on income below the
threshold amounts.
Over the years, experts have debated whether or not the way in which
the poverty threshold is calculated should be changed. Currently the
calculation only accounts for pretax income and does not include
noncash benefits and tax transfers, which, especially in recent years,
have comprised larger portions of the assistance package to those who
are low-income.[Footnote 7] For example, food stamps and the Earned
Income Tax Credit could provide a combined amount of assistance worth
an estimated $5,000 for working adults with children who earn
approximately $12,000 a year.[Footnote 8] If noncash benefits were
included in a calculation of the poverty threshold, the number and
percentage of individuals at or below the poverty line could change. In
1995, a National Academy of Sciences (NAS) panel recommended that
changes be made to the threshold to count noncash benefits, tax
credits, and taxes; deduct certain expenses from income such as child
care and transportation; and adjust income levels according to an
area's cost of living.[Footnote 9] In response, the Census Bureau
published an experimental poverty measure in 1999 using the NAS
recommendations in addition to its traditional measure but, to date,
Census has not changed the official measure.[Footnote 10]
U.S. Poverty Rates:
In 2005, close to 13 percent of the total U.S. population--about 37
million people--were counted as living below the poverty line, a number
that essentially remained unchanged from 2004. Poverty rates differ,
however, by age, gender, race, and ethnicity and other factors. For
example,
* Children: In 2005, 12.3 million children, or 17.1 percent of children
under the age of 18, were counted as living in poverty. Children of
color were at least three times more likely to be in poverty than those
who were white: 3.7 million, or 34.2 percent of, children who were
African-American and 4 million, or 27.7 percent of, children who were
Hispanic lived below the poverty line compared to 4 million, or 9.5
percent of, children who were white.[Footnote 11]
* Racial and ethnic minorities: African-Americans and Hispanics have
significantly higher rates of poverty than whites. In 2005, 24.9
percent of African-Americans (9.2 million) and 22 percent of Hispanics
(9.4 million) lived in poverty, compared to 8.3 percent for whites
(16.2 million).
* Elderly: The elderly have lower rates of poverty than other groups.
For example, 10.1 percent of adults (3.6 million) aged 65 or older
lived in poverty.
Poverty rates also differ depending on geographical location and for
urban and nonurban areas. Poverty rates for urban areas were double
those in suburbs, 17 percent compared to 9.3 percent.[Footnote 12]
Poverty rates in the South were the highest at 14 percent; the West had
a rate of 12.6 percent, followed by the Midwest with 11.4 percent and
the Northeast at 11.3 percent.[Footnote 13]
The Role of the Federal Government:
The U.S. government has a long history of efforts to improve the
conditions of those living with severely limited resources and income.
Presidents, Congress, and other policymakers have actively sought to
help citizens who were poor, beginning as early as the 1850s through
the more recent efforts established through welfare reform initiatives
enacted in 1996.
Over the years, the policy approaches used to help low-income
individuals and families have varied. For example, in the1960s federal
programs focused on increasing the education and training of those
living in poverty. In the 1970s, policy reflected a more income-
oriented approach with the introduction of several comprehensive
federal assistance plans. More recently, welfare reform efforts have
emphasized the role of individual responsibility and behaviors in areas
such as family formation and work to assist people in becoming self-
sufficient. Although alleviating poverty and the conditions associated
with it has long been a federal priority, approaches to developing
effective interventions have sometimes been controversial, as evidenced
by the diversity of federal programs in existence and the ways in which
they have evolved over time.
Currently, the federal government, often in partnership with the
states, has created an array of programs to assist low-income
individuals and families. According to a recent study by the
Congressional Research Service (CRS), the federal government spent over
$400 billion on 84 programs in 2004 that provided cash and noncash
benefits to individuals and families with limited income. These
programs cover a broad array of services: Examples include income
supports or transfers such as the Earned Income Tax Credit and TANF;
work supports such as subsidized child care and job training; health
supports and insurance through programs like the State Children's
Health Insurance Program (SCHIP) and Medicaid; and other social
services such as food, housing, and utility assistance. Table 1
provides a list of examples of selected programs.
Table 1: Selected Examples of Federal Cash and Noncash Assistance to
Low-Income Families and Individuals, Fiscal Year 2004:
Purpose: Cash aid;
Program: Temporary Assistance for Needy Families (TANF);
Federal cash outlay: $10.4 billion[A];
Program description: Permits a state to give ongoing basic cash aid to
families that include a minors or a pregnant woman. Work and other
requirements must be met.
Purpose: Cash aid;
Program: Earned Income Tax Credit (EITC);
Federal cash outlay: $37.9 billion[B];
Program description: Provides a refundable credit to workers with and
without children.
Purpose: Food and nutrition;
Program: Food Stamp Program;
Federal cash outlay: $27.2 billion[C];
Program description: Provides certain allotments to individuals for
purchasing of food items, based upon the individual's level of
eligibility/need.
Purpose: Food and nutrition;
Program: Special Supplemental Nutrition Program for Women, Infants and
Children (WIC);
Federal cash outlay: $4.5 million;
Program description: Provides benefits for low-income mothers, infants,
and children considered to be at "nutritional risk.".
Purpose: Medical;
Program: Medicaid;
Federal cash outlay: $176 billion;
Program description: Provides payments to health care providers in full
or via co-pay for eligible low-income families and individuals and for
long-term care to eligible individuals who are aged or disabled.
Purpose: Medical;
Program: State Children's Health Insurance Program (SCHIP);
Federal cash outlay: $4.6 billion[D];
Program description: Provides federal matching funds for states and
territories to provide health insurance to targeted low-income
children.
Purpose: Educational;
Program: Federal Pell Grant Program;
Federal cash outlay: $12 billion;
Program description: Provides assistance to undergraduate students who
meet a certain needs test and are enrolled in an eligible institution
of postsecondary education.
Purpose: Educational;
Program: Head Start;
Federal cash outlay: $6.8 billion[E];
Program description: Provides comprehensive services to targeted low-
income children. Services include educational, medical, dental,
nutritional, and social services.
Purpose: Housing;
Program: Section 8 Low-Income Housing Assistance;
Federal cash outlay: $22.4 billion;
Program description: Provides rental assistance through vouchers or
rental subsidies to eligible low- income families or single persons.
Purpose: Services;
Program: Child Care and Development Block Grant (CCDBG);
Federal cash outlay: $6.9 billion;
Program description: Provides funding to low-income parents for child
care.
Purpose: Services;
Program: Social Services Block Grant (SSBG) (Title XX);
Federal cash outlay: $1.7 billion;
Program description: Provides funding to assist states in providing
social services to eligible low-income individuals or families.
Purpose: Jobs;
Program: Job Corps;
Federal cash outlay: $1.5 billion;
Program description: Provides no-cost training and education to low-
income individuals ages 16-24 while providing a monthly allowance
payment.
Purpose: Energy;
Program: Low-Income Home Energy Assistance Program (LIHEAP);
Federal cash outlay: $1.9 billion;
Program description: Provides assistance to low-income home owners and
renters to help meet energy needs such as heating and cooling.
Source: For a full list of federal programs, see Cash and Noncash
Benefits for Persons with Limited Income: Eligibility Rules, Recipient
and Expenditure Data, FY2002-FY2004; Washington D.C. 2006.
[A] Federal outlay figures in table 1 are from fiscal year 2004, as
reflected in the CRS report from which they are taken, sourced above.
Some exceptions apply and are noted. The TANF figure, $10.4 billion, is
the estimated total of federal and state expenditures combined for only
TANF cash aid in fiscal year 2004. This figure does not include other
combined federal and state funding for the following: TANF child care,
estimated at $2.5 billion in fiscal year 2004; TANF work programs and
activities, estimated at $2.2 billion in fiscal year 2004; and TANF
services estimated at $6.3 billion in fiscal year 2004.
[B] EITC federal outlay total of $37.9 billion is for fiscal year 2003
as reported in GAO, Means Tested Programs: Information on Program
Access Can Be an Important Management Tool, GAO-05-221 (Washington,
D.C. March 2005).
[C] For more on the Food Stamp Program, see GAO-05-839R, (Washington,
D.C.: June 30, 2005).
[D] For more on SCHIP federal outlay figure of $4.6 billion, see GAO-
05-839R.
[E] Head Start federal outlay total of $6.8 billion is for fiscal year
2005.
[End of table]
Economic Research Links Poverty with Adverse Outcomes for Individuals
Such as Poor Health and Crime:
Economic research suggests that individuals living in poverty face an
increased risk for adverse outcomes, such as poor health, criminal
activity, and low participation in the workforce. The adverse outcomes
that are associated with poverty tend to limit the development of
skills and abilities individuals need to contribute productively to the
economy through work, and this in turn, results in low incomes. The
relationship between poverty and outcomes for individuals is complex,
in part because most variables, like health status, can be both a cause
and a result of poverty. The direction of the causality can have
important policy implications. To the extent that poor health causes
poverty, and not the other way around, then alleviating poverty may not
improve health.
Individuals Living in Poverty Experience Higher Rates of Adverse Health
Outcomes, in Part because of Limited Access to Health Care,
Environmental Hazards, and Risky Behaviors:
Health outcomes are worse for individuals with low incomes than for
their more affluent counterparts. Lower-income individuals experience
higher rates of chronic illness, disease, and disabilities, and also
die younger than those who have higher incomes.[Footnote 14] As
reported by the National Center on Health Statistics, individuals
living in poverty are more likely than their affluent counterparts to
experience fair or poor health, or suffer from conditions that limit
their everyday activities (fig.1). They also report higher rates of
chronic conditions such as hypertension, high blood pressure, and
elevated serum cholesterol, which can be predictors of more acute
conditions in the future. Life expectancies for individuals in poor
families as compared to nonpoor families also differ significantly. One
study showed that individuals with low incomes had life expectancies 25
percent lower than those with higher incomes.[Footnote 15] Other
research suggests that an individual's household wealth predicts the
amount of functionality of that individual in retirement.[Footnote 16]
Figure 1: Selected Health Indicators by Poverty Status:
[See PDF for image]
Source: National Center for Health Statistics, Health, United States,
2006 with Chartbook on Trends in the Health of Americans (Hyattsville,
Maryland: 2006).
[End of figure]
Research suggests that part of the reason that those in poverty have
poor health outcomes is that they have less access to health insurance
and thus less access to health care, particularly preventive care, than
others who are nonpoor. Very low-income individuals were three times as
likely not to have health insurance than those with higher incomes,
which may lead to reduced access to and utilization of health care
(fig. 2).
Figure 2: Percentage of Population with No Health Insurance (Private or
Medicaid) by Poverty Status:
[See PDF for image]
Source: National Center for Health Statistics, Health, United States,
2006 with Chartbook on Trends in the Health of Americans (Hyattsville,
Maryland: 2006).
[End of figure]
Data show that those who are poor with no health insurance access the
health system less often than those who are either insured or wealthier
when measured by one indicator of health care access: visits to the
doctor. For example, data from the National Center on Health Statistics
show that children in families with income below the poverty line who
were continuously without health insurance were three to four times
more likely to have not visited a doctor in the last 12 months than
children in similar economic circumstances who were insured (fig. 3).
Research also suggests that a link between income and health exists
independent of health insurance coverage. Figure 3 also shows that
while children who are uninsured but in wealthier families visit the
doctor fewer times than those who are insured, they still go more often
than children who are uninsured but living in poverty.
Figure 3: No Visits to Any Health Provider in the Past 12 Months
(Children under 18 Years of Age) by Level of Insurance:
[See PDF for image]
Source: National Center for Health Statistics, Health, United States,
2006 with Chartbook on Trends in the Health of Americans (Hyattsville,
Maryland: 2006).
[End of figure]
Some research examining government health insurance suggests that
increased health insurance availability improves health outcomes.
Economists have studied the expansion of Medicaid, which provides
health insurance to those with low income. They found that Medicaid's
expansion of coverage, which occurred between 1979 and 1992, increased
the availability of insurance and improved children's health outcomes.
For example, one study found that a 30 percentage point increase in
eligibility for mothers aged 15-44 translated into a decrease in infant
mortality of 8.5 percent.[Footnote 17] Another study looked at the
impact of health insurance coverage through Medicare and its effects on
the health of the elderly and also found a statistically significant
though modest impact.[Footnote 18] There is some evidence that
variations in health insurance coverage do not explain all the
differences in health outcomes. A study done in Canada found
improvements in children's health with increases in income, even though
Canada offers universal health insurance coverage for hospital
services, indicating that health insurance is only part of the
story.[Footnote 19]
Although there is a connection among poverty, having health insurance,
and health outcomes, having health insurance is often associated with
other attributes of an individual, thus making it difficult to isolate
the direct effect of health insurance alone. Most individuals in the
United States are either self-insured or insured through their
employer. If those who are uninsured have lower levels of education, as
do individuals with low income, differences in health between the
insured and uninsured might be due to level or quality of education,
and not necessarily insurance.[Footnote 20]
Another reason that individuals living in poverty may have more
negative health outcomes is because they live and work in areas that
expose them to environmental hazards such as pollution or substandard
housing. Some researchers have found that because poorer neighborhoods
may be located closer to industrial areas or highways than more
affluent neighborhoods, there tend to be higher levels of pollution in
lower-income neighborhoods.[Footnote 21] The Institute of Medicine
concluded that minority and low-income communities had
disproportionately higher exposure to environmental hazards than the
general population, and because of their impoverished conditions were
less able to effectively change these conditions.[Footnote 22]
The link between poverty and health outcomes may also be explained by
lifestyle issues associated with poverty. Sedentary life-style: the use
of alcohol and drugs; as well as lower consumption of fiber, fresh
fruits, and vegetables are some of the behaviors that have been
associated with lower socioeconomic status.[Footnote 23] Cigarette
smoking is also more common among adults who live below the poverty
line than among those above it, about 30 percent compared to 21
percent.[Footnote 24] Similarly, problems with being overweight and
obese are common among those with low family incomes, although most
prevalent in women: Women with incomes below 130 percent of the poverty
line were 50 percent more likely to be obese than those with incomes
above this amount.[Footnote 25] Figure 4 shows that people living in
poverty are less likely to engage in regular, leisure-time physical
activity than others and are somewhat more likely to be obese, and
children in poverty are somewhat more likely to be overweight than
children living above the poverty line. In addition, there is also
evidence to suggest a link among poverty, stress, and adverse health
outcomes, such as compromised immune systems.[Footnote 26]
Figure 4: Percentage of Population Who Have a Sedentary Lifestyle, Are
Overweight, or Are Obese, by Poverty Status:
[See PDF for image]
Source: National Center for Health Statistics, Health, United States,
2006 with Chartbook on Trends in the Health of Americans (Hyattsville,
Maryland: 2006).
[End of figure]
While evidence shows how poverty could result in poor health, the
opposite could also be true. For example, a health condition could
result, over time, in restricting an individual's employment, resulting
in lower income. Additionally, the relationship between poverty and
health outcomes could also vary by demographic group.[Footnote 27]
Failing health, for example, can be more directly associated with
household income for middle-aged and older individuals than with
children, since adults are typically the ones who work.
Economic Research Shows an Association Between Poverty and Crime:
Just as research has established a link between poverty and adverse
health outcomes, evidence suggests a link between poverty and crime.
Economic theory predicts that low wages or unemployment makes crime
more attractive, even with the risks of arrest and incarceration,
because of lower returns to an individual through legal
activities.[Footnote 28] While more mixed, empirical research provides
support for this. For example, one study shows that higher levels of
unemployment are associated with higher levels of property crime, but
is less conclusive in predicting violent crime.[Footnote 29] Another
study has shown that both wages and unemployment affect crime, but that
wages play a larger role.[Footnote 30]
Research has found that peer influence and neighborhood effects may
also lead to increased criminal behavior by residents. Having many
peers that engage in negative behavior may reduce social stigma
surrounding that behavior.[Footnote 31] In addition, increased crime in
an area may decrease the chances that any particular criminal activity
will result in an arrest. Other research suggests that the neighborhood
itself, independent of the characteristics of the individuals who live
in it, affects criminal behavior.[Footnote 32] One study found that
arrest rates were lower among young people from low-income families who
were given a voucher to live in a low-poverty neighborhood, as opposed
to their peers who stayed in high-poverty neighborhoods. The most
notable decrease was in arrests for violent crimes; the results for
property crimes, however, were mixed, with arrest rates increasing for
males and decreasing for females.[Footnote 33]
Adverse Outcomes, Such as Poor Health and Low Educational Attainment,
Lead to Reduced Participation in the Labor Market:
Regardless of whether poverty is a cause or an effect, the conditions
associated with poverty limit the ability of low-income individuals to
develop the skills, abilities, knowledge, and habits necessary to fully
participate in the labor force, in turn, leads to lower incomes.
According to 2000 Census data, people aged 20-64 with income above the
poverty line in 1999 were almost twice as likely to be employed as
compared to those with incomes below it.[Footnote 34] Some of the
reasons for these outcomes include educational attainment and health
status.
Poverty is associated with lower educational quality and attainment,
both of which can affect labor market outcomes. Research has
consistently demonstrated that the quality and level of education
attained by lower-income children is substantially below those for
children from middle-or upper-income families. Moreover, high school
dropout rates in 2004 were four times higher for students from low-
income families than those in high-income families.[Footnote 35] Those
with less than a high school degree have unemployment rates almost
three times greater than those with a college degree, 7.6 percent
compared to 2.6 percent in 2005. And the percentage of low-income
students who attend college immediately after high school is
significantly lower than for their wealthier counterparts: 49 percent
compared to 78 percent.[Footnote 36]
A significant body of economic research directly links adverse health
outcomes, which are also associated with low incomes, with the quality
and quantity of labor that the individual is able to offer to the
workforce. Many studies that have examined the relationship among
individual adult health and wages, labor force participation, and job
choice have documented positive empirical relationships among health
and wages, earnings, and hours of work.[Footnote 37] Although there is
no consensus about the exact magnitude of the effects, the empirical
literature suggests that poor health reduces the capacity to work and
has substantive effects on wages, labor force participation, and job
choice, meaning that poor health is associated with low income.
Research also demonstrates that poor childhood health has substantial
effects on children's future outcomes as adults. Some research, for
example, shows that low birth weight is correlated with a low health
status later in life. Research also suggests that poor childhood health
is associated with reduced educational attainment and reduced cognitive
development. Reduced educational attainment may in turn have a causal
effect not only on future wages as discussed above but also on adult
health if the more educated are better able to process health
information or make more informed choices about their health care or if
education makes people more "future oriented" by helping them think
about the consequences of their choices. In addition, some research
shows that poor childhood health is predictive of poor adult health and
poor adult economic status in middle age, even after controlling for
educational attainment.
Economic Research Suggests a Negative Association between Poverty and
Economic Growth:
The economic literature suggests that poverty not only affects
individuals but can also create larger challenges for economic growth.
Traditionally, research has focused on the importance of economic
growth for generating rising living standards and alleviating poverty,
but more recently it has examined the reverse, the impact of poverty on
economic growth. In the United States, poverty can impact economic
growth by affecting the accumulation of human capital and rates of
crime and social unrest. While the empirical research is limited, it
points to the negative association between poverty and economic growth
consistent with the theoretical literature's conclusion that higher
rates of poverty can result in lower rates of growth.
Research has shown that accumulation of human capital is one of the
fundamental drivers of economic growth.[Footnote 38] Human capital
consists of the skills, abilities, talents, and knowledge of
individuals as used in employment. The accumulation of human capital is
generally held to be a function of the education level, work
experience, training, and healthiness of the workforce.[Footnote 39]
Therefore, schooling at the secondary and higher levels is a key
component for building an educated labor force that is better at
learning, creating, and implementing new technologies. Health is also
an important component of human capital, as it can enhance workers'
productivity by increasing their physical capacities, such as strength
and endurance, as well as mental capacities, such as cognitive
functioning and reasoning ability. Improved health increases workforce
productivity by reducing incapacity, disability, and the number of days
lost to sick leave, and increasing the opportunities to accumulate work
experience. Further, good health helps improve education by increasing
levels of schooling and scholastic performance.
The accumulation of human capital can be diminished when significant
portions of the population have experienced long periods of poverty, or
were living in poverty at a critical developmental juncture. For
example, recent research has found that the distinct slowdown in some
measures of human capital development is most heavily concentrated
among youth from impoverished backgrounds. When individuals who have
experienced poverty enter the workforce, their contributions may be
restricted or minimal, while others may not enter the workforce in a
significant way. Not only is the productive capability of some citizens
lost, but their purchasing power and savings, which could be channeled
into productive investments, is forgone as well.
In addition to the effects of poverty on human capital, some economic
literature suggests that poverty can affect economic growth to the
extent that it is associated with crime, violence, and social unrest.
According to some theories, when citizens engage in unproductive
criminal activities they deter others from making productive
investments or their actions force others to divert resources toward
defensive activities and expenditures. The increased risk due to
insecurity can unfavorably affect investment decisions--and hence
economic growth--in areas afflicted by concentrated poverty. Although
such theories link poverty to human capital deficiencies and criminal
activity, the magnitude of their impact on economic growth for an
economy such as the United States is unclear at this time.[Footnote 40]
In addition, people living in impoverished conditions generate
budgetary costs for the federal government, which spends billions of
dollars on programs to assist low-income individuals and families.
Alleviating these conditions would allow the federal government to
redirect these resources toward other purposes.
While economic theory provides a guide to understanding how poverty
might compromise economic growth, empirical researchers have not as
extensively studied poverty as a determinant of growth in the United
States. Empirical evidence on the United States and other rich nations
is quite limited, but some recent studies support a negative
association between poverty and economic growth. For example, some
research finds that economic growth is slower in U.S. metropolitan
areas characterized by higher rates of poverty than those with lower
rates of poverty.[Footnote 41] Another study, using data from 21
wealthy countries, has found a similar negative relationship between
poverty and economic growth.[Footnote 42]
Concluding Observations:
Maintaining and enhancing economic growth is a national priority that
touches on all aspects of federal decision making. As the nation moves
forward in thinking about how to address the major challenges it will
face in the twenty-first century, the impact of specific policies on
economic growth will factor into decisions on topics as far ranging as
taxes, support for scientific and technical innovation, retirement and
disability, health care, education and employment. To the extent that
empirical research can shed light on the factors that affect economic
growth, this information can guide policymakers in allocating
resources, setting priorities, and planning strategically for our
nation's future.
Economists have long recognized the strong association between poverty
and a range of adverse outcomes for individuals, and empirical
research, while limited, has also begun to help us better understand
the impact of poverty on a nation's economic growth. The
interrelationships between poverty and various adverse social outcomes
are complex, and our understanding of these relationships can lead to
vastly different conclusions regarding appropriate interventions to
address each specific outcome. Furthermore, any such interventions
could take years, or even a generation, to yield significant and
lasting results, as the greatest impacts are likely to be seen among
children. Nevertheless, whatever the underlying causes of poverty may
be, economic research suggests that improvements in the health,
neighborhoods, education, and skills of those living in poverty could
have impacts far beyond individuals and families, potentially improving
the economic well-being of the nation as a whole.
Reviewer Comments:
We provided the draft report to four outside reviewers with expertise
in the areas of poverty and economic growth. The reviewers generally
acknowledged that our report covers a substantial body of recent
economic research on the topic and did not dispute the validity of the
specific studies included in our review. However, they expressed some
disagreement over our presentation of this research.
Some reviewers felt that the evidence directly linking poverty to
adverse outcomes is more robust than implied by our summary and
directed us to additional research that bolsters the link between
poverty and poor health and crime. We did not incorporate this
additional research into our findings, but we reviewed it and found it
consistent with the evidence already incorporated in our summary. Other
reviewers felt that our report implied a stronger relationship between
poverty and adverse outcomes than is supported by the research. They
felt that the report did not provide adequate information on the causes
of poverty and external factors that could be responsible for both
poverty and adverse outcomes. In response to these comments, we made
several revisions to the text to ensure that the information we
presented was balanced. The reviewers also provided technical comments
that we incorporated as appropriate.
Copies of this report are being sent to the Departments of Commerce,
Health and Human Services, Justice, and Labor; appropriate
congressional committees; and other interested parties. Copies will be
made available to others upon request. The report is also available at
no charge on the GAO Web site at [Hyperlink, http://www.gao.gov].
If you or your staff have any questions about matters discussed in this
report, please contact me at (202) 512-7215 or at nilsens@gao.gov.
Other contact and staff acknowledgments are listed in appendix II.
Sincerely,
Signed by:
Sigurd R. Nilsen:
Director, Education, Workforce, and Income Security Issues:
[End of section]
Appendix I: Bibliography:
Adler, Nancy E., and Katherine Newman. "Socioeconomic Disparities in
Health: Pathways and Policies." Health Affairs, Vol. 21 No. 2, 2002.
Aghion, Phillipe, et al. "Inequality and Economic Growth: The
Perspective of the New Growth Theories." Journal of Economic
Literature, Vol. XXXVII: 1999.
Barro, Robert. "Inequality and growth in a panel of countries." Journal
of Economic Growth, 5 (1): 2000.
Barsky, Robert B., et al. "Preference Parameters and Behavioral
Heterogenity: An Experimental Approach in the Health and Retirement
Study." Review of Economic Statistics, 1997.
Burtless, G., and C. Jenks. "American Inequality and Its Consequences."
In (eds), H. Aaron et al, Agenda for the Nation. Washington, DC:
Brookings Institution Press, 2003.
Card, David, and Carlos Dobkin, Nicole Maestas. "The Impact of Nearly
Universal Insurance Coverage on Health Care Utilization and Health:
Evidence from Medicare." National Bureau of Economic Research, Working
Paper No. 10365. Cambridge, Massachusetts: National Bureau of Economic
Research: 2004.
Case, Anne C., and Angus Deaton. "Broken Down by Work and Sex: How our
Health Declines." National Bureau of Economic Research, Working Paper
No. 9821. Cambridge, Massachusetts: National Bureau of Economic
Research: 2003.
Case, Anne, Angela Fertig, and Christina Paxson. "The Lasting Impact Of
Childhood Health And Circumstance." Journal of Health Economics, 24
(2): 2005.
Case, Anne, Darren Lubotsky, and Christina Paxson. "Economic Status and
Health in Childhood: The Origins of the Gradient." American Economic
Review, Vol. 92, No. 5., Dec. 2002.
Chay, Kenneth, and Michael Greenstone. "Air Quality, Infant Mortality,
and the Clean Air Act of 1970." National Bureau of Economic Research,
Working Paper No. 10053. Cambridge, Massachusetts: National Bureau of
Economic Research: 2003.
Chui, W. Henry. "Income Inequality, Human Capital Accumulation and
Economic Performance." Economic Journal, 108. 1998.
Currie, Janet, and Jonathan Gruber. "Saving Babies: The Efficiency and
Cost of Recent Changes in the Medicaid Eligibility of Pregnant Women."
Journal of Political Economy, Vol. 104, No. 6, 1996.
Currie, Janet, and Rosemary Hyson. "Is the Impact of Health Shocks
Cushioned by Socioeconomic Status? The Case of Low Birthweight"
American Economic Review Papers and Proceedings of the One Hundred
Eleventh Annual Meeting of the American Economic Association, 89 (2):
1999.
Currie, Janet, and Brigitte Madrian. "Health, Health Insurance and the
Labor Market." In (eds), O. Ashenfelter and D. Card, Handbook of Labor
Economics, Vol. 3. Elsevier Science. 1999.
Currie, Janet and Mark Stabile. "Socioeconomic Status and Child Health:
Why is the Relationship Stronger for Older Children?" American Economic
Review, Vol. 93, No 5., Dec. 2003.
Currie, Janet, and Matthew Neidell. "Air Pollution and Infant Health:
What Can We Learn From California's Recent Experience?" Quarterly
Journal of Economics, 120 (3), 2005.
Cutler, David, Angus Deaton, and Adriana Lleras-Muney. "The
Determinants of Mortality." Journal of Economic Perspectives, Vol. 20,
No. 3, 2006.
DeCicca, Phillip, Donald Kenkel, Alan Mathios. "Racial Difference in
the Determinants of Smoking Onset." Journal of Risk and Uncertainty.
2000. Vol. 21, Iss. 2/3; p311.
------. "Putting Out The Fires: Will Higher Taxes Reduce the Onset of
Youth Smoking?" Journal of Political Economy. 2002.Vol.110, Iss.1; p.
144.
Deaton, Angus. "Policy Implications of the Gradient of Health and
Wealth." Health Affairs, Vol. 21, No.2, 2002.
Delong, J. et al. "Sustaining U.S. Economic Growth." In H. Aaron et al.
(eds.), Agenda for the Nation. Washington, DC: Brookings Institution
Press, 2003.
Dev Bhatta, Saurav. "Are Inequality and Poverty Harmful for Economic
Growth: Evidence from the Metropolitan Areas of the United States."
Journal of Urban Affairs, 23 (3&4): 2001.
Fallah, B., and M. Partridge. "The Elusive Inequality-Economic Growth
Relationship: Are There Differences between Cities and the
Countryside?" University of Saskatchewan Working Paper, February 2006.
Federal Reserve Bank of New York, "Unequal Incomes, Unequal Outcomes?
Economic Inequality and Measures of Well-Being: Proceedings of a
Conference Sponsored by the Federal Reserve Bank of New York," Economic
Policy Review, Vol. 5 (3), September 1999. [Hyperlink,
http://www.ny.frb.org/research/epr/1999n3.html].
Forbes, K. "A Reassessment of the Relationship between Inequality and
Growth." The American Economic Review, 90 (4): 2000.
Freeman, Richard B. "Why Do So Many Young American Men Commit Crimes
and What Might We Do About It?" Journal of Economic Perspectives, Vol.
10, No. 1, 1996.
Gould, Eric D., Bruce A. Weinberg, and David B. Mustard. "Crime Rates
and Local Labor Market Opportunities in the United States: 1979-1997."
The Review of Economics and Statistics, 84 (1): 2002.
Grogger, Jeff. "Market Wages and Youth Crime." Journal of Labor
Economics, Vol. 16, No. 4. Chicago: 1998.
Heckman, J., and A. Krueger. Inequality in America: What Role for Human
Capital Policies. Cambridge, Massachusetts: The MIT Press, 2003.
Ho, P. "Income Inequality and Economic Growth." Kylos, 53 (3): 2003.
Holzer, Harry, et al. "The Economic Costs of Poverty in the United
States." Unpublished working paper, 2006.
Hsing, Yu. "Economic Growth And Income Inequality: The Case Of The US."
International Journal of Social Economics, 32 (7): 2005.
Katz, Lawrence F., Jeffrey R. Kling, and Jeffrey B. Liebman. "Moving to
Opportunity in Boston: Early Results of a Randomized Mobility
Experiment." The Quarterly Journal of Economics, May 2001.
Kling, Jeffrey R., Jens Ludwig, and Lawrence F. Katz. "Neighborhood
Effects on Crime for Female and Male Youth: Evidence from a Randomized
Housing Voucher Experiment." Quarterly Journal of Economics, Feb. 2005.
Lochner, Lance, and Enrico Moretti. "The Effect of Education on Crime:
Evidence from Prison Inmates, Arrests and Self-Reports." American
Economic Review, 2004.
Ludwig, Jens, and Greg J. Duncan, Paul Hirschfield. "Urban Poverty and
Juvenile Crime: Evidence from a Randomized Housing-Mobility
Experiment." Quarterly Journal of Economics, May 2001.
McGarry, Kathleen. "Health and Retirement: Do Changes in Health Affect
Retirement Expectations?" Journal of Human Resources, Vol. XXXIX, 2004.
Mo, P. "Income Inequality and Economic Growth." Kyklos, 53 (3): 2000.
Newberger, R., and T. Riggs, "The Impact of Poverty on Location of
Financial Establishments: Evidence from Across-Country Data."
Profitwise News and Views, Federal Reserve Bank of Chicago, April 2006.
Panizza, Ugo. "Income Inequality and Economic Growth: Evidence from
American Data." Journal of Economic Growth, 7 (1): 2002.
Partridge, Mark. "Is Inequality Harmful for Growth? Comment." The
American Economic Review, 87 (5): 1997.
Persson, T., and G. Tabellini. "Is Inequality Harmful for Growth?" The
American Economic Review, 84 (3): 1994.
Rank, Mark. One Nation Underprivileged: Why American Poverty Affects Us
All. Oxford: Oxford University Press, 2004.
Raphael, Steven, and Rudolf Winter-Ebner. "Identifying the Effect of
Unemployment on Crime." Journal of Law and Economics, Vol. XLIV. 2001.
Sallis, J.F., et al. "The Association of School Environments with Youth
Physical Activity." American Journal of Public Health, Vol. 91, No. 4,
2001.
Sandy, Carola. "Essays on the Macroeconomic Impact of Poverty."
Columbia University Libraries, [Hyperlink,
http://digitalcommons.libraries.columbia.edu/dissertations/AAI9970273],
2000.
Sherman, Arloc. Wasting America's Future: The Children's Defense Fund
Report On The Costs Of Child Poverty. Boston, Massachusetts: Beacon
Press Books, 1994.
Siegel, Michele J. "Measuring the Effect of Husband's Health on Wife's
Labor Supply." Health Economics, 15 (6): 2006.
Smith, James P. "Healthy Bodies and Thick Wallets: The Dual Relation
between Health and Economic Status." Journal of Economic Perspectives,
Vol. 13, No. 2, 1999.
------. "The Impact of SES on Health over the Life-Course." Rand
Working Paper Series. Rand Labor and Population: 2005.
Smith, James, and Raynard Kington. "Demographic and Economic Correlates
of Health in Old Age." Demography, Vol. 34, No. 1, 1997.
Teles, Vladimir. "The Role of Human Capital in Economic Growth."
Applied Economic Letters, 12: 2005.
U.S. Census Bureau. Income, Poverty, and Health Insurance Coverage in
the United States: 2005. Washington, D.C.: 2006:
U.S. Department of Health and Human Services, Centers for Disease
Control and Prevention. Health, United States, 2006. Washington, D.C.:
2006.
------. Health, United States, 1998. Washington, D.C.: 1998.
U.S. Department of Housing and Urban Development. Moving to Opportunity
Demonstration Data. Washington, D.C.: May, 2004.
------. Moving to Opportunity for Fair Housing. Washington, D.C.: Dec.
2000. [Hyperlink, http://www.hud.gov/progdesc/mto.cfm].
Voitchovsky, S. "Does the Profile of Income Inequality Matter for
Economic Growth? Distinguishing Between the Effects of Inequality in
Different Parts of the Income Distribution." Journal of Economic
Growth, Vol. 10 (3): 2005.
[End of section]
Appendix II: Contacts and Acknowledgments:
GAO Contact:
Sigurd Nilsen, (202) 512-7215 or nilsens@gao.gov:
Acknowledgments:
Kathy Larin, Assistant Director, and Janet Mascia, Analyst-in-Charge,
managed this assignment. Lawrance Evans, Ben Bolitzer , Ken Bombara,
Amanda Seese, and Rhiannon Patterson made significant contributions
throughout the assignment. Charles Willson, Susannah Compton, and
Patrick DiBattista helped develop the report's message.
In addition, Doug Besharov, Dr. Maria Cancian, Dr. Sheldon Danziger,
and Dr. Lawrence Mead reviewed and provided comments on the report.
FOOTNOTES
[1] In 2005 the poverty threshold for a family of four was $19,971.
[2] Congressional Research Service, Cash and Noncash Benefits for
Persons with Limited Income: Eligibility Rules, Recipient and
Expenditure Data, FY2002-FY2004 (Washington, D.C.: Mar. 27, 2006).
[3] GAO, Informing Our Nation: Improving How to Understand and Assess
the USA's Position and Progress, GAO-05-1 (Washington, D.C., November
2004), p.4.
[4] GAO-05-01.
[5] GAO-05-01, p.34.
[6] The U.S. Department of Health and Human Services (HHS) establishes
poverty guidelines that are similar to the poverty thresholds but are
used by HHS and other agencies for administering programs, such as
determining program eligibility.
[7] Congressional Research Service, Poverty in the United States: 2005
(Washington, D.C.: Aug. 31, 2006).
[8] Danzinger, Sheldon, "Fighting Poverty Revisited: What Did
Researchers Know 40 Years Ago? What Do We know Today?" Dec. 4, 2006.
[9] For a summary of the NAS panel recommendations see Congressional
Research Service Report 95-539, Redefining Poverty in the United
States: National Academy of Science Panel Recommendations, by Thomas R.
Gabe (archived) (Washington, D.C.: 1995).
[10] U.S. Census Bureau, Poverty among Working Families: Findings from
Experimental Poverty Measures (Washington, D.C.: Sept. 2000).
[11] Beginning in March 2003, the Census Bureau allowed survey
respondents to identify themselves as belonging to one or more racial
groups. In prior years, respondents could select only one racial
category. Consequently, poverty statistics for different racial groups
for 2002 and after are not directly comparable to earlier years' data.
The term "blacks and white" refers to persons who identified with only
one single racial group. The term "Hispanic" refers to individuals'
ethnic, as opposed to racial, identification. Hispanics may be of any
race.
[12] Congressional Research Service, Poverty in the United States: 2005
(Washington, D.C.: Aug. 31, 2006).
[13] Congressional Research Service, Poverty in the United States: 2005
(Washington, D.C.: Aug. 31, 2006).
[14] Centers for Disease Control and Prevention, Health, United States,
2006; 1998 (Hyattsville, Maryland).
[15] Deaton, Angus, "Policy Implications of The Gradient of Health and
Wealth," Health Affairs, Vol. 21., No.2, March 2002.
[16] Smith, James, and Raynard Kington, "Demographic and Economic
Correlates of Health in Old Age." Demography, Vol. 34, No. 1, 1997.
[17] Currie, Janet, and Jonathan Gruber, "Saving Babies: The Efficacy
and Cost of Recent Changes in the Medicaid Eligibility of Pregnant
Women," The Journal of Political Economy, Vol. 104, No. 6, December
1996.
[18] Card, David, et. al., "The Impact of Nearly Universal Insurance
Coverage on Health Care Utilization and Health: Evidence from Medicare"
National Bureau of Economic Research, Working Paper 10365. NBER, March
2004.
[19] Currie, Janet, and Mark Stabile, "Socioeconomic Status and Child
Health: Why Is the Relationship Stronger for Older Children." American
Economic Review, Vol. 93, No. 5, December 2003.
[20] Additionally, differences in individual health outcomes can
sometimes be explained by other factors that may be associated with
poverty, but are difficult to detect, such as risk aversion.
[21] While much of the specific biological mechanism by which air
pollution might affect health is still unknown, some recent research by
economists has noted a link between pollution and health, especially
for infants. Currie and Neidell (2005) find that the decrease in the
level of carbon monoxide in California in the 1990s had a significant
effect on reducing infant mortality. See Currie, Janet, and Matthew
Neidell, "Air Pollution and Infant Health: What Can We Learn From
California's Recent Experience?" Quarterly Journal of Economics, 120
(3), 2005. Similarly, Chay and Greenstone (2003) find that the
reduction in total suspended particulates due to the 1970 Clean Air Act
had a significant impact on infant mortality. See Chay, Kenneth, and
Michael Greenstone, "Air Quality, Infant Mortality, and the Clean Air
Act of 1970." National Bureau of Economic Research, Working Paper No.
10053. NBER, 2003.
[22] Institute of Medicine, Committee on Environmental Justice, "Toward
Environmental Justice: Research, Education, and Health Policy Needs",
(Washington, D.C.: 1999), p.6.
[23] Adler, Nancy E., and Katherine Newman, "Socioeconomic Disparities
in Health: Pathways and Policies." Health Affairs, Vol. 21 No. 2, 2002.
See also Deaton, Angus. "Policy Implications of the Gradient of Health
and Wealth." Health Affairs, Vol. 21, No.2: 2002.
[24] Centers for Disease Control and Prevention, Tobacco Use among
Adults-United States, 2005. Morbidity and Mortality Weekly Report ,
2006; 55(42): 1145-1148. Some research suggests that part of the reason
why smoking rates are higher may be peer effects, especially among
youth smokers. See DeCicca, Phillip, Donald Kenkel, and Alan Mathios,
"Racial Difference in the Determinants of Smoking Onset." Journal of
Risk and Uncertainty. Boston: 2000. Vol. 21, Iss. 2/3; p311. Other
studies have shown that educational attainment can affect smoking use
as well. See DeCicca, Philip, Donald Kenkel, and Alan Mathios,"Putting
Out the Fires: Will Higher Taxes Reduce the Onset of Youth Smoking?"
Journal of Political Economy. Chicago 2002.Vol.110, Iss.1; p. 144.
[25] U.S. Public Health Service, Surgeon General's Call To Action to
Prevent and Decrease Overweight and Obesity 2001, Washington, DC, pp.
13-14.
[26] While access to care, behavior, and environmental factors are some
of the most commonly offered reasons for the relationship between
poverty and health, recent literature has suggested other alternative
theories, of which there is less of a research tradition. These include
the effect of short exposures to health shocks as a result of poverty,
such as poor nutrition or increased adrenalin due to higher levels of
stress, and psycho-social stress that leads to problems with the immune
system. See Smith, James P., "Healthy Bodies and Thick Wallets: The
Dual Relation between Health and Economic Status." The Journal of
Economic Perspectives, Vol. 13, No. 2, 1999.
[27] It is not clear whether these adverse outcomes occur with greater
frequency among all individuals living in households below the poverty
line or only among those experiencing extreme poverty; those who
experience poverty during critical development stages, such as infancy
or early childhood; or those who experience long bouts of poverty.
[28] Criminal behavior has been measured by reports to the police in an
area, self-reported crime by individuals in surveys or arrests, as well
as other measures. See also Freeman, Richard, "Why Do So Many Young
American Men Commit Crimes and What Might We Do About It?" Journal of
Economic Perspectives, Vol. 10, No. 1: Winter 2006.
[29] Raphael, Steven, and Rudolf Winter-Ebner, "Identifying the Effect
of Unemployment on Crime." Journal of Law and Economics, Vol. XLIV.
2001.
[30] Gould, Eric D., Bruce A. Weinberg, and David B. Mustard, "Crime
Rates and Local Labor Market Opportunities in the United States: 1979-
1997. Review of Economics and Statistics, 84 (1): 2002.
[31] Katz, Lawrence F., Jeffrey R. Kling, and Jeffrey B. Liebman,
"Moving to Opportunity in Boston: Early Results of a Randomized
Mobility Experiment." Quarterly Journal of Economics, May 2001.
[32] However, a challenge that researchers face is that, almost by
definition, many individuals share the same characteristics in a
neighborhood. Therefore, it is difficult to determine whether it is the
characteristic of the individual or the neighborhood that is the source
of the behavior.
[33] [Hyperlink,
Http://www.huduser.org/publications/fairhsg/MTODemData.html and
http://www.hud.gov/prodesc/mto.cfm]. Some economists have used data
from the Moving-to-Opportunity experiment as a way to attribute
causality. Moving-to-Opportunity is a research demonstration in which a
number of families, chosen randomly, within five public housing
authorities were given housing vouchers to be used in low-poverty
neighborhoods. Another group of families acted as the control, and were
not given the vouchers. Using these data, some economists have compared
the outcomes for children whose families received the vouchers and
those that did not. To some extent, the results have confirmed that
neighborhood, independent of individual characteristics, affects
criminal behavior, but the results have also been mixed. Using data
from the randomized housing experiment, Ludwig, Duncan, and Hirschfeld
(2001) found that the housing vouchers reduced violent arrests by
teens, but may have increased the number of property arrests. Kling,
Ludwig, and Katz (2005) also used the Moving-to-Opportunity data, but
looked for differential effects by gender. The authors found that for
females, there were large reductions in the amount of arrests for both
property and violent crime, when compared to those for the control
group. For males, there were reductions in violent arrests, but
proportionally smaller than the drops for females. In addition, there
were significant increases in the rate of property arrests.
[34] U.S. Census Bureau, Employment Status: 2000, Census 2000 Brief
(Washington, D.C., August 2003), p.4
[35] National Center for Education Statistics, U.S. Department of
Education, Dropout Rates in the United States: 2004, (Washington, D.C.
November 2006), p. 4.
[36] Choy, Susan, "College Access and Affordability," Education
Statistics Quarterly, Vol. 1, Issue 2, Topic: Postsecondary Education.
[37] Several methodological challenges exist in this literature: For
example, many of these findings could reflect the effect of income on
health rather than vice versa. In addition, results are highly
sensitive to the measures of health that are used, with self-reported
health status subject to several forms of bias, some of which could
overstate the relationship between income and health, and others of
which could understate the relationship. For example, individuals who
have reduced their hours of work or left the labor force may be more
likely to report poor health, in order to justify their reduced labor
supply or because government programs provide incentives to report
disability; this would lead to an upward bias in the estimated
relationship between income and health. On the other hand, it is
possible that higher-income individuals, who on average have greater
health care utilization, may be more likely to be diagnosed with
certain conditions simply because of their greater access to health
care. This would lead to a downward bias in the estimated relationship
between income and health.
[38] Economic models that consider human capital to be a fundamental
driver of economic growth are commonly referred to as endogenous growth
models, although the more traditional neoclassical model has also been
augmented to include the role of human capital. Endogenous growth
theory posits technological growth as occurring through dynamics inside
the model. Although there are several competing models, crucial
importance in each is given to the production of new technologies and
human capital. While the major point these models emphasize is that
human capital is the driving force behind growth, the actual modeling
of the relationship is still a controversial issue in the economic
literature. Some growth models assert that the driving force behind
economic growth is the rate of accumulation of human capital, in which
the rate of economic growth is proportional to the rate of accumulation
of human capital. Another approach considers that high levels of human
capital, as embodied in the level of the educational attainment of the
workforce, increases the capacity of individuals to innovate (discover
new technology) or to adopt new technology.
[39] In general, economists regard expenditures on education, training,
medical care, and so on as investments in human capital. Collectively,
theoretical growth models suggest economic growth results from
improvements in human capital as embodied in the skills and experience
of the labor force; from expansion of physical capital in the form of
plant and equipment; and from progress in science, engineering, and
management that generates technological advance. While many variables
have been empirically tested, only a few have been accepted as being
statistically significant in explaining growth. The role of human
capital is now almost universally regarded as being indispensable in
this respect.
[40] Human capital deficits experienced by some impoverished
individuals cannot always be attributed to experience of poverty. In
some cases, low education attainment and poor health, although
associated with poverty, may actually be caused by some other factor
that is also responsible for poverty. In this case, poverty would be a
symptom rather than a cause (i.e., poor health, poor choices, or
addiction may erode human capital potential and cause poverty).
Similarly, most poor people do not commit crimes, and those that do may
be motivated by forces unrelated to their incomes.
[41] The relationship is not always statistically significant in all
regions. Statistical insignificance in some cases might be more
attributable to data issues such as sample size or multicollinearity
rather than an indication of nonrelationship between poverty and income
growth in various regions. See S. Dev Bhatta, "Are Inequality and
Poverty Harmful for Economic Growth," Journal of Urban Affairs, 22 (3-
4): 2001. This study provides, arguably, a better comparison group than
cross-country studies, since metropolitan statistical areas in the
United States are at relatively similar stages of development.
[42] Voitchovsky, S., "Does the Profile of Income Inequality Matter for
Economic Growth? Distinguishing between the Effects of Inequality in
Different Parts of the Income Distribution." Journal of Economic
Growth, Vol.10.: 2005.
GAO's Mission:
The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the performance
and accountability of the federal government for the American people.
GAO examines the use of public funds; evaluates federal programs and
policies; and provides analyses, recommendations, and other assistance
to help Congress make informed oversight, policy, and funding
decisions. GAO's commitment to good government is reflected in its core
values of accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through GAO's Web site (www.gao.gov). Each weekday, GAO posts
newly released reports, testimony, and correspondence on its Web site.
To have GAO e-mail you a list of newly posted products every afternoon,
go to www.gao.gov and select "Subscribe to Updates."
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. Government Accountability Office 441 G Street NW, Room LM
Washington, D.C. 20548:
To order by Phone: Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202)
512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: fraudnet@gao.gov
Automated answering system: (800) 424-5454 or (202) 512-7470:
Congressional Relations:
Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 U.S.
Government Accountability Office, 441 G Street NW, Room 7125
Washington, D.C. 20548:
Public Affairs:
Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800
U.S. Government Accountability Office, 441 G Street NW, Room 7149
Washington, D.C. 20548: